Sunday, August 9, 2009
Economics 09/08/2009: Banks
A new post - the one promised a while ago - on Euro Area Banking Survey by ECB (July 2009 results), part 1 is now available on my Long Rune Economics blog here. Enjoy - most of this data has not seen the daylight in any media outlet and some of it has serious consequences for Irish banks, consumers etc... in other words - this is the bigger fish worth frying...
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I am not au fait with the ECB report or its accuracy but the general conclusions you draw would seem to be correct.
You are right when you say depositors have no where to run. The banking system in Europe is semi protected. It has a strong licencing system which dissuades new entrants, its not liable fo VAT etc so in many country cases there are powerul opolies which extract more than their pound of flesh from society as they have a licence to do so. Banking has been an unusual business to say the least and remains the case. Hence the blind mantra, too important to let go.
You mention that Italy's banks are fairing better than most. Interestingly I seem to recall that may of them had a large partial state ownership and may still have from 'problems' in the past.
You also correctly point out that bank customers (businesses and consumers) will be squeezed out by NAMA and also by bank margins, where the bad performing loans are let off interest payments.
Who said banking was fair?
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